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Italy’s sick body needs sounder minder

The hope is that the promises of change, renewal and progress towards shared goals will be delivered. The experience in most modern democracies falls rather short of such expectations. It could be said that the victory of Silvio Berlusconi’s coalition in 2001 was a moment of hope. The former cruise-ship crooner is a brilliant salesman and a majority of Italians accepted his invitation to join him on an exciting journey. The talents which had made him the nation’s richest man would create riches for his country and rising prosperity for its people.

Which is not quite the way things turned out. The record he is defending at the polls this Sunday and Monday is not one of renewal but of economic stagnation and loss of competitiveness. Nor is it one of social progress and modernisation. His record in European politics is scarcely more distinguished. His mastery of the art of the silly remark earned him a reputation for buffoonery in which he takes refuge when under pressure. He may have likened the European Parliament’s Socialist leader Martin Schulz to a concentration camp commander, but he has also compared himself and his sufferings to Jesus Christ.

In Brussels, where officials are too grounded to allow hope to triumph over experience, neither the prospect of a return of the Berlusconi coalition nor of a victory for the opposition under Romano Prodi raises the collective pulse-rate. Both men are well known to the Commission and the Council and neither has much of a following in these institutions. Berlusconi injected a more acidic view of the costs and benefits of the EU into Italian policy while moving decidedly closer to Washington and away from Paris and Berlin. During his first brief administration he may not have known that he was doing the Commission a big favour when he sent Mario Monti to Brussels in 1995 where he became the most distinguished Italian commissioner for decades. But he was aware he was doing it no favours in replacing Monti with Rocco Buttiglione in 2004. By then, memories of the Italian presidency in the second half of 2003 were dominated by Berlusconi’s disastrous chairmanship of the Intergovernmental Conference that left heads of government in angry deadlock over the draft constitution.

Unfortunately, Romano Prodi suffers from being a known quantity in Brussels after his five years as Commission president. The passage of time has not added lustre to his reputation although, collectively, his Commission is reckoned to have been of a higher quality than the present one. Lacking both charisma and communication skills, he was well-liked in the Commission, though uninspiring. To his credit, his Commission piloted a respectable reform of the Common Agricultural Policy and drove forward the much more difficult enlargement exercise. But there were many fumbles as well, not least in the weak application of the Stability and Growth Pact. If Prodi were to return to the European Council, he would probably add support to efforts to revive the draft constitution but it is difficult to see him carrying a great deal more weight than his predecessor.

In reality, such is the severity of Italy’s economic problems and so energy-sapping will be the tasks of domestic political management that neither man would have much time to think about the Union, let alone attempt to shape its direction. But in Brussels, the policies of the next Italian government, whatever its political colouring, will preoccupy the Union. That Italy is now the ‘sick man of Europe’ is a truism. What is less widely understood is that there is a definite EU complicity in the worsening of Italy’s economic health. For much of the last five years, the Broad Economic Policy Guidelines adopted annually by the Council have designed a recovery path for the Italian economy which the Berlusconi government has resolutely ignored without serious public rebuke from its peers. A Commission review published last year of Italian performance measured against the Union’s recommendations is a sobering record of disregard. On consolidating and ensuring the long-term sustainability of public finances, policy performance was judged “limited” or “insufficient”. Similar ratings were issued for raising the employment rate, strengthening the knowledge-based economy and improving the business environment.

The dictum “those whom the Gods would destroy they first make mad” comes immediately to mind when confronted with the economic promises that the Berlusconi and Prodi camps have been making on the campaign trail. Bearing in mind that the budget deficit (3.9% of Gross Domestic Product, or GDP) and total public debt (106% of GDP) are way above the Union’s prescribed limits, both sides are signing IOUs to the Italian voter like drunken poker players. For funding, they will both be relying heavily on that old Italian standby, a crackdown on tax evasion – which nearly always disappoints. As many Italian commentators have gloomily observed, this is not serious politics. The responsibility lies mainly with Berlusconi who has avoided policy as much as he can and concentrated on labelling his opponents as anti-democratic Communists who will tax the economy into oblivion and slice away Italian freedoms. He is not wrong to point up the ideological divisions in the Prodi coalition between nostalgic ex-Communists who loathe the market economy and technocratic social democrats. But Berlusconi’s own coalition is hardly more cohesive, and his position as premier would be an immediately divisive issue if his Forza Italia party polls significantly fewer votes than last time.

Italy’s political, economic and social problems and difficulties are shared in varying degrees by many other EU Member States. But they are now so severe that, left unresolved, they threaten the economic and political welfare of the Union itself. Uncured, the Italian sickness will become a deadweight on the eurozone economy and a continuing anxiety for those who care about standards of democratic conduct in Europe.

John Wyles is a partner in the Brussels-based consultancy GPlus Europe.